How to Teach Your Kids About Money
What we learn as children can have a major impact on what we value when we get older. Things like a love of reading or music or a certain sport are among the most common, but the same is true for finances. Talking about money with children can help provide the foundational understanding that better prepares them to understand better down the road.
A 2017 study from T. Rowe Price found that kids whose parents discuss financial topics with them are more likely (61%) to feel smart about the subject than kids whose parents who did not (41%).
From picture books to checkbooks, parents can play a pivotal role in their children’s understanding of money and personal finances. Below is a list of concepts parents should consider teaching their children at various stages of development, along with various consequences to emphasize. While some of these may come out of order, the general idea is to put a consistent emphasis on teaching financial literacy.
Concepts to Teach
- What is money?
- Why and how is it used?
- What are the different denominations?
- Cash vs. digital currency; how are they similar and different?
Consequences to Emphasize
- If you don’t know how much money you have, you won’t know what you can or can’t buy.
Concepts to Teach
- Difference between wants and needs, and why it matters
- The value of a dollar as it relates to goods & services kids can understand
- Short-term vs. long-term
- What are sources of income? How do you get money?
Consequences to Emphasize
- If you buy this, you may not be able to buy something else
- Once you spend your money, it’s gone
Concepts to Teach
- Ways to earn money, like employment or selling things you own
- Budgeting
- Credit and interest
- Identity theft
Consequences to Emphasize
- Don’t spend faster than you can earn
Concepts to Teach
- What’s your credit score and why it matters
- Debt, and the difference between good and bad debt
- What investing is and how it can help or hurt your finances
- Retirement planning
Consequences to Emphasize
- Identity theft
- The high cost of bad debt
- Kidsbank
- Rat Race
- Bankaroo
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- MoneyOrc
- Piggy
- Kids Learning Money
- Crazy Cashier
